Martela Oyj - Financial Statement Release

MARTELA CORPORATION'S FINANCIAL STATEMENTS RELEASE, 1 JANUARY - 31 DECEMBER 2014

MARTELA CORPORATION        FINANCIAL STATEMENTS RELEASE    4 February 2015 at
8.30 a.m. 


MARTELA CORPORATION'S FINANCIAL STATEMENTS RELEASE, 1 JANUARY - 31 DECEMBER 2014

Consolidated revenue increased slightly, the result improved significantly and
the operating result was slightly positive. 

Key figures:



                           10-12  10-12   1-12   1-12
EUR million                 2014   2013   2014   2013
- Revenue                   31.2   36.9  135.9  132.3
- Change in revenue, %     -15.2   -9.7    2.7   -7.3
- Operating result          -1.1   -0.6    0.2   -3.1
- Operating result, %       -3.4   -1.6    0.1   -2.4
- Earnings/share, EUR      -0.27  -0.26  -0.18  -1.03
- Return on investment, %  -11.6   -6.5    0.5   -8.4
- Return on equity, %      -21.2  -17.3   -3.4  -17.4
- Equity ratio, %                         38.1   37.2
- Gearing ratio, %                        33.4   51.7



The Martela Group anticipates that its revenue in 2015 will remain at the
previous year's level and that its operating result will show a slight
year-on-year improvement. The Group's operating result is weighted towards the
second half of the year due to normal seasonal variation, and this weighting
was further emphasised by the timing of larger projects during 2015. 

Market

The demand for office furniture in Finland and Sweden continued to be weak and
there are still no signs of a clear improvement. Demand in Finland and Sweden
is still largely focused on office alteration and enhancement projects of
different kinds rather than new offices. In spite of the weak market
conditions, the activity-based office model, which is well suited to office
alteration and enhancement projects, has aroused plenty of interest in
customers in Sweden, Norway, Finland and Russia. Customers who choose the
activity-based office model and the Martela Lifecycle model to modify and
enhance their offices can make considerable savings in their premises costs,
but at the same time they are also able to improve their employees' job
satisfaction and efficiency. The Polish market weakened during the second half
of the year and this situation has continued. The instability in the Russian
economy continued in the second half of the year and this has led to reduced
activity in the property market. 

Finnish office construction statistics are examined for the first nine months
of 2014. These statistics are presented below on the basis of a 12-month
rolling average: 


Finnish office construction statistics (m2):  
12-month rolling average, change              30 Sept 2014 vs 30 Sept 2013*
Building completions                                                    -1%
Building permits granted                                                22%
Building starts                                                         33%



* Change in the 12-month rolling average between the dates is compared.

Martela has used the above office construction statistics as a key indicator
when assessing overall market developments. Despite the weakness of the general
market conditions, the increase in the number of building starts can be
regarded as a mildly positive sign. Nonetheless, in terms of square metres, the
values remain very low. However, the demand for Martela products is affected by
many other factors too, such as overall economic growth and the need for
companies to use their premises more efficiently. The need to boost efficiency
increases the number of office alteration projects, which in turn generates
demand especially for Martela's activity-based office model. These projects
also result in companies allocating fewer square metres of space for each
employee, which means that they purchase fewer pieces of traditional office
furniture, such as desks, cupboards and cabinets. However, the demand for
products and solutions for all kinds of meeting spaces and lobbies is on the
increase. 

Consolidated revenue and result

The Group's fourth-quarter revenue performance in all market areas reflected
the weak market conditions. Fourth quarter revenue was EUR 31.2 million (36.9),
a decrease of 15.2 per cent from the previous year. Consolidated revenue for
the full year 2014 was EUR 135.9 million (132.3), an increase of 2.7 per cent
on the previous year. Revenue in Finland declined significantly, both in the
fourth quarter and cumulatively, as a consequence of the weak market
conditions. In Poland, by contrast, slight growth was achieved during the
review period measured in the local currency. In Sweden revenue declined in the
fourth quarter, but, by contrast, revenue for the full year increased
considerably as a consequence of the major customer deliveries in the first
half of the year. Revenue and result grew significantly in Russia which is
reported in the Group in the other segment. But in the latter half of the year,
the turmoil on the Russian market and the impact on the rouble reduced market
demand during the last part of the year. 

Business Unit Finland's revenue was down by 5.2 per cent. Business Unit Sweden& Norway's revenue was up by 21.7 per cent, and Business Unit Poland's by 4.9
per cent, calculated in local currencies. Movements in exchange rates did not
have a significant impact on the Group's revenue. 

The operating result for the fourth quarter declined and was EUR -1.1 million
(-0.6). The cumulative full-year operating result increased considerably and
was EUR 0.2 million (-3.1), which was 0.1 per cent (-2.4) of revenue. 

The Group's full year revenue grew and fixed costs fell from the previous year,
as anticipated, due to the adjustment measures taken. The sales margin on the
Group's products for the review period was unchanged from the previous year.
The combined effect of these factors resulted in a clear year-on-year
improvement in Martela's consolidated operating result. 

The EUR 6 million savings programme launched in the Group in the autumn of 2013
proceeded according to plan. As part of the savings programme, the company held
codetermination negotiations during the latter part of 2013. Following the
outcome of the negotiations, the Group's cost level was reduced by costs
equivalent to 35 employees during 2014. The Group's delivery chain costs were
considerably reduced with various production boosting measures during the
review period. Production transfers between the Group's units located in
Nummela and Riihimäki in Finland, in Warsaw, Poland, and in Bodafors, Sweden
proceeded according to plan, and most of these were completed by the end of the
year. These measures have created a distinct role for each of Martela's
production units and ensure a more flexible and efficient service for
customers. Several more minor measures were also implemented during the review
period, which will affect the efficiency of service production and the Group's
fixed costs. The measures taken are expected to achieve the targeted annual
savings of EUR 6 million. It is estimated that due to the timing of the
measures the programme's impact on total costs in 2014 was equivalent to about
one third of the total savings target. The full saving in costs, which will be
felt as a reduction in the Group's delivery chain costs and fixed costs, will
be achieved during 2015. 

Demand for activity-based office solutions continued to increase considerably
during the review period, so Martela will continue to focus on providing even
higher quality comprehensive solutions and associated services in the field of
activity-based working. Launched in the review period, the Martela Lifecycle
model offers customers a comprehensive solution that covers everything from
planning to recycling. The model can help to reduce customers' premises costs
while also increasing employees' job satisfaction and efficiency at customer
companies. The Group's aim is to further strengthen its pioneering position as
a supplier of comprehensive solutions and as a leading service provider for
offices and other working environments. 

The result before taxes was EUR -0.6 million (-4.6), and the result after taxes
was EUR -0.7 million (-4.2). 

Martela's full financial statements 2014 is included in PDF format as an
attachment to this release. The financial statements 2014 is also available on
the company's website at www.martela.com. 



Martela Oyj
Board of Directors
Heikki Martela
CEO


For more information, please contact
Heikki Martela, CEO, tel. +358 50 502 4711
Markku Pirskanen, CFO, tel. +358 40 517 4606

Distribution
NASDAQ OMX Nordic
Main News Media
www.martela.fi

Attachments:

Financial Statements release 2014.pdf